Behavior GapCarl Richards is a Certified Financial Planner in the US. He produces popular drawings of financial situations that makes the complicated simple.

You can see his famous drawings, which appear in the New York Times,  here: http://www.behaviorgap.com/shop/

Importantly, his company is called the Behavior Gap. This is the concept of a private investor’s behaviour when managing their own investments, resulting in them earning LOWER rates of return than the markets, or more specifically the funds they are investing in.

I quoted some research in a recent blog on DIY Investing where the average investor hugely underperformed the fund they were invested in. This doesn’t surprise me, because it is so easy to do what feels right. We are programmed to react emotionally in our decision making process. We want to buy a fund when it has done well and sell a fund when it performs poorly. That is a very common path for investors to take and a path that leads to what Carl refers to as the behaviour gap.

Blog by Jaskarn Pawar

Jaskarn Pawar is an experienced and award winning Chartered and Certified Financial Planner. He advises people all over the UK on financial planning and wealth management issues to help them reach solutions to fit their personal needs. You can contact Jaskarn on 01604 211234 or by e-mail on jaskarn@investorprofile.co.uk